Hello Group Inc. Announces Unaudited Financial Results

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Hello Group Inc.,v (MOMO) a leading player in mainland China's online social networking space, has announced its unaudited financial results for the first quarter of 2024. The company reported a 9.2% decrease in net revenues to RMB2,560.4 million (US$354.6 million), with net income attributable to Hello Group Inc. (MOMO) decreasing to RMB5.2 million (US$0.7 million) from RMB390.3 million in the same period of 2023. Non-GAAP net income attributable to Hello Group Inc. (MOMO) decreased to RMB59.9 million (US$8.3 million) in Q1 2024, mainly due to the accrual of withholding income tax on historical undistributed earnings generated by the company's wholly-foreign owned enterprise ("WFOE").

Diluted net income per American Depositary Share (ADS) was RMB0.03 (US$0.00) in Q1 2024, compared to RMB1.96 in Q2 2023. Non-GAAP diluted net income per ADS was RMB0.31 (US$0.04) in Q1 2024, compared to RMB2.36 in Q2 2023. Monthly Active Users (MAU) on Tantan app were 13.7 million in March 2024, compared to 19.5 million in March 2023. For the Momo app, total paying users was 7.1 million for Q1 2024, compared to 7.8 million for the same period last year. Tantan had 1.1 million paying users for Q1 2024, compared to 1.6 million from the previous year.

Hello Group (MOMO) Chairman and CEO Yan Tang stated that the company has made steady progress in implementing strategic priorities for Momo, Tantan, and new endeavors since the beginning of the year. Product innovation and technological advancements have enabled Momo to play an important role in helping users discover new relationships and build meaningful interactions, laying a solid foundation for maintaining user and revenue scale over the long term. The overseas team has accelerated the localization process to drive continued growth in new endeavors, and the company looks forward to delivering high-quality social and entertainment services to a much broader user base globally.

In Q1 2024, mobile games revenues decreased by 88.3% from Q1 2023. The Momo segment's net revenues decreased from RMB2,510.1 million to RMB2,318.9 million due to a decrease in value-added service and live video service on the Momo app. The Tantan segment's net revenues also decreased from RMB308.6 million to RMB241.5 million due to a decrease in live video service and value-added service.

Cost and expenses decreased by 12.4% from Q1 2023 to RMB2,120.0 million, primarily due to a decrease in revenue sharing with broadcasters related to live video service on the Momo and Tantan apps, and a decrease in revenue sharing with virtual gift recipients of the Momo app. This decrease was partially offset by an increase in revenue sharing with virtual gift recipients for new standalone apps.

Non-GAAP cost and expenses decreased by 11.6% to RMB2,065.3 million. Income from operations increased by 63.8 million to RMB460.3 million, while non-GAAP income from operations increased by 71.3 million to RMB515.0 million. Non-GAAP income from operations decreased by 517.8 million to RMB515.0 million, while non-GAAP income from operations increased by 67.7 million to RMB488.5 million.

Income tax expenses increased by 77.2 million to RMB557.6 million, compared to RMB122.6 million in Q1 2023. The company's net income from operations decreased by 88.3% to RMB3,419 million in Q1 2024.

Technical Outlook
Hello Group Inc., (MOMO) stock is down 1.99% in pre-market trading as a result of the weak earnings report. The stock has a Relative Strength Index (RSI) of 35.27 which is quite oversold. The Moving Average Convergence Divergence (MACD) all poses a bearish trend in the near term.